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Topics: Cost Management, Portfolio Management, Strategy
Putting a Project On-Hold, pros and cons, how much to accept a cost increase?
Does anyone has any definition or criteria to declare a Project on hold, what could be pros and cons of putting it on hold (as sometimes due to regulatory issues or Customer delays, it is not possible to progress with Project) and also any criteria to accept cost increase as a maximum in a Project already in progress?
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A Project can be put on hold if it no longer aligns with the company's strategic or tactical objectives.

If the project does not support where the company's vision and mission are headed, often companies make the decision to not continue with investment of resources (time, cost, human capital) into that project.

The Pros :- Saves the company valuable resources (time, cost, human capital) which is better spent at supporting another initiative that is closely aligned with the company's strategic or tactical objectives.

The Cons:- 1) People who are working on the project may lose their employment and maybe back on the job market.
2) The team will have to start again on another project or start work with different people and again have to undergo Forming...storming...Norming..... There is change involved which tends to be one of the biggest barriers.

With regards to cost, when the decision is made to put a project on hold , all costs required to accurately reflect the status of the project up-to the date when there was going to be no more work on that project - eg contractor costs, software licenses, external agency employee salaries should have been accounted for.
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1 reply by Mario Cadena Briones
Dec 04, 2019 4:29 PM
Mario Cadena Briones
...
Thank you Deepesh, Project was according to vision and mission, nevertheless due to external reasons a decision needs to be taken on to put it on hold or not, so we have to analyze pros and cons and additional implications.

Best regards
Mario -

Deepesh has done a good job of covering the main pros & cons of putting projects on hold. I'd go a step further and say if we are unable to effectively deliver the project at the moment due to priority shifts or capacity constraints but are unwilling to cancel it outright, then putting it on hold is a good interim strategy.

As far as cost increases go, it really depends on the context of the project. If we have a non-discretionary project, then we may be required to accept any level of cost increase to deliver the bare minimum scope. On the other hand, if it is a discretionary project and we aren't time or scope bound, the sponsor or customer might decide to cancel the project if even a small cost increase occurs if it makes the project less compelling from a net benefits perspective.

Kiron
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1 reply by Mario Cadena Briones
Dec 04, 2019 4:35 PM
Mario Cadena Briones
...
Thank you Kiron

I´m seriously considering to put it on hold as this is a non-discretionary project, but yes, it is really important to define associated costs and accept certain level of cost at risk.

Best regards
The criteria for putting a project on hold are many and it could depend on many internal and/or external factors. I have been on many projects that were put on hold and it was always either budgetary or dependency constraints. So either the money that was earmarked is not available when it was supposed to be or a major dependency would prevent a project from proceeding. Again the pros and cons would depend on the situation i.e. on which side of the fence the project sits - supplier or consumer. But the one negative about any on-hold project is that much of the work that was invested into it up to that point is lost.

Any criteria used to put a project on hold will need to consider mob and demob costs and you need to determine if putting a project on hold for 6 months will offset these costs. If not you might just want to suspend some activities and keep a skeleton team going.
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1 reply by Mario Cadena Briones
Dec 04, 2019 4:43 PM
Mario Cadena Briones
...
Thank you Anton

In this case Project dependency and constraints are external, customer side, others on regulation, so yes, I need to quantify the potential loss and define a certain % to accept in order to make a final decision

Best regards
BTW this is a great example of a project that was put on hold a few times. But this is also a good example of how a significant project delay can spin off multiple other projects while the original is on hold.

https://www.dw.com/en/new-berlin-airport-t...ober/a-51471371
...
1 reply by Mario Cadena Briones
Dec 04, 2019 4:45 PM
Mario Cadena Briones
...
Thank you for sharing Anton,
Nosotros seguimos un proceso basado en el metodo Stage Gate.
El criterio de evaluacion es:
Siempre hay cuatro decisiones posibles:
¿ Tiene sentido estratégico, técnico, financiero ? NO, entonces Kill
¿ Se obtiene la calidad esperada ? NO, entonces Redirect
¿ Tenemos el dinero y gente disponible ? NO:
Prioridad alta, entonces Continue
Prioridad baja, entonces Hold
Que un proyecto pase a Hold no quiere decir que ocasiones mayores costos. De hecho, no deberia ser asi.
...
1 reply by Mario Cadena Briones
Dec 04, 2019 4:49 PM
Mario Cadena Briones
...
Muchas gracias Sergio,

En este caso aplica

¿ Tiene sentido estratégico, técnico, financiero ? SI,
¿ Se obtiene la calidad esperada ? SI hasta ahora lo que se ha evaluado.
¿ Tenemos el dinero y gente disponible ? SI:
Prioridad alta, entonces Continue, pero hay dependencias externas que lo impiden.
Prioridad baja, entonces Hold, Es prioridad Alta
Que un proyecto pase a Hold no quiere decir que ocasiones mayores costos. De hecho, no deberia ser asi.... Coincido totalmente aunque se perdería lo invertido hasta ahora mientras se define si continua, pero al no haber recursos asignados no debería haber mayor costo o incrementos.

Saludos cordiales,
Dec 03, 2019 8:04 PM
Replying to Deepesh Rammoorthy
...
A Project can be put on hold if it no longer aligns with the company's strategic or tactical objectives.

If the project does not support where the company's vision and mission are headed, often companies make the decision to not continue with investment of resources (time, cost, human capital) into that project.

The Pros :- Saves the company valuable resources (time, cost, human capital) which is better spent at supporting another initiative that is closely aligned with the company's strategic or tactical objectives.

The Cons:- 1) People who are working on the project may lose their employment and maybe back on the job market.
2) The team will have to start again on another project or start work with different people and again have to undergo Forming...storming...Norming..... There is change involved which tends to be one of the biggest barriers.

With regards to cost, when the decision is made to put a project on hold , all costs required to accurately reflect the status of the project up-to the date when there was going to be no more work on that project - eg contractor costs, software licenses, external agency employee salaries should have been accounted for.
Thank you Deepesh, Project was according to vision and mission, nevertheless due to external reasons a decision needs to be taken on to put it on hold or not, so we have to analyze pros and cons and additional implications.

Best regards
Dec 03, 2019 8:28 PM
Replying to Kiron Bondale
...
Mario -

Deepesh has done a good job of covering the main pros & cons of putting projects on hold. I'd go a step further and say if we are unable to effectively deliver the project at the moment due to priority shifts or capacity constraints but are unwilling to cancel it outright, then putting it on hold is a good interim strategy.

As far as cost increases go, it really depends on the context of the project. If we have a non-discretionary project, then we may be required to accept any level of cost increase to deliver the bare minimum scope. On the other hand, if it is a discretionary project and we aren't time or scope bound, the sponsor or customer might decide to cancel the project if even a small cost increase occurs if it makes the project less compelling from a net benefits perspective.

Kiron
Thank you Kiron

I´m seriously considering to put it on hold as this is a non-discretionary project, but yes, it is really important to define associated costs and accept certain level of cost at risk.

Best regards
Dec 03, 2019 11:32 PM
Replying to Anton Oosthuizen
...
The criteria for putting a project on hold are many and it could depend on many internal and/or external factors. I have been on many projects that were put on hold and it was always either budgetary or dependency constraints. So either the money that was earmarked is not available when it was supposed to be or a major dependency would prevent a project from proceeding. Again the pros and cons would depend on the situation i.e. on which side of the fence the project sits - supplier or consumer. But the one negative about any on-hold project is that much of the work that was invested into it up to that point is lost.

Any criteria used to put a project on hold will need to consider mob and demob costs and you need to determine if putting a project on hold for 6 months will offset these costs. If not you might just want to suspend some activities and keep a skeleton team going.
Thank you Anton

In this case Project dependency and constraints are external, customer side, others on regulation, so yes, I need to quantify the potential loss and define a certain % to accept in order to make a final decision

Best regards
Dec 04, 2019 12:06 AM
Replying to Anton Oosthuizen
...
BTW this is a great example of a project that was put on hold a few times. But this is also a good example of how a significant project delay can spin off multiple other projects while the original is on hold.

https://www.dw.com/en/new-berlin-airport-t...ober/a-51471371
Thank you for sharing Anton,
Dec 04, 2019 9:32 AM
Replying to Sergio Luis Conte
...
Nosotros seguimos un proceso basado en el metodo Stage Gate.
El criterio de evaluacion es:
Siempre hay cuatro decisiones posibles:
¿ Tiene sentido estratégico, técnico, financiero ? NO, entonces Kill
¿ Se obtiene la calidad esperada ? NO, entonces Redirect
¿ Tenemos el dinero y gente disponible ? NO:
Prioridad alta, entonces Continue
Prioridad baja, entonces Hold
Que un proyecto pase a Hold no quiere decir que ocasiones mayores costos. De hecho, no deberia ser asi.
Muchas gracias Sergio,

En este caso aplica

¿ Tiene sentido estratégico, técnico, financiero ? SI,
¿ Se obtiene la calidad esperada ? SI hasta ahora lo que se ha evaluado.
¿ Tenemos el dinero y gente disponible ? SI:
Prioridad alta, entonces Continue, pero hay dependencias externas que lo impiden.
Prioridad baja, entonces Hold, Es prioridad Alta
Que un proyecto pase a Hold no quiere decir que ocasiones mayores costos. De hecho, no deberia ser asi.... Coincido totalmente aunque se perdería lo invertido hasta ahora mientras se define si continua, pero al no haber recursos asignados no debería haber mayor costo o incrementos.

Saludos cordiales,
...
1 reply by Sergio Luis Conte
Dec 05, 2019 4:23 AM
Sergio Luis Conte
...
Si lo pones on hold no se pierde lo invertido hasta ahora porque generaste entregables de algun tipo y eso fue inversion. Esto es valido a menos que estes generando algo que se degrada con el tiempo y entonces el periodo de on hold debe ser considerado en ese sentido. Como vos estas contestando a todo SI entonces no deberia estar on hold. Las prioridades externas, cuales son? Por ejemplo, nos pasa casos donde hay relacion con otras iniciativas y entonces vamos a los otros program managers/project managers a acordar sobre las prioridades y a veces resulta que "on hold" tiene que ser puesto el programa/proyecto que ellos llevan (vos sabes como es, todos quieren terminar el proyecto. No es mi caso, para mi el objetivo de todos esta por encima porque si no todos nos hacemos mal). Pero bueno, para ser sincero, yo estoy dando datos sin tener mas infomracion para evaluar. Sobre todo que, como diria mi abuela "cada lugar es un mundo". De todas formas, el script que puse ahi es el proceso estandar que se sigue en cada stage gate no mas que eso. Es decir, hay que ajustarlo "al hogar" de cada uno. Te digo, en el ultimo año, he estado a cargo de programas/proyectos prioridad uno (por ejemplo, eran imposiciones del gobierno tales como cambio de moneda) en paises de la region y de algunas partes del mundo donde la situación del país era un infierno. Asi y todo, salieron en tiempo y forma con el menor impacto para la gente que participaba del proyecto. Quiero decir, en mi experiencia personal, las circunstancias externas siempre pueden tener una mitigacion.
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